So How Dumb Is It To Own a House If Almost One-Third of all US Home Sales are Distressed Properties?

Foreclosure: 5933 Meaders Lane

Looking at the U.S. housing market, sales of bank-owned properties accounted for 28% of all U.S. residential sales in quarter one of 2011. That’s worse than last year by one percentage point, and up from 27% in the fourth quarter. This from RealtyTrac in its 1Q 2011 survey. The California-based foreclosure data firm says the sales price of properties in foreclosure fell 1.89%, hitting an average of $168,321 during the same period.

And guess what: that’s what’s dragging down our market like a lead weight.

Example: the average sales price for properties in foreclosure, says RealtyTrac, fell approximately 27% below prime properties, the report said. So this is why, which I am sure you know, that you cannot get decent appraisals for anything anymore. It’s also why homes bought during the froth of the bubble are taking checks to closing.

During third quarter 2010, buyers snapped up 158,434 U.S. bank-owned homes and properties in some stage of the foreclosure process, down 16% from fourth-quarter figures and 36% from year-ago levels. The Robo-signing hold-up or whatever, but distressed sales are slowing.

And the slowing down of this clearing out process appears to be what is hurting our real estate market.

“While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery,” said James Saccacio, chief executive officer of RealtyTrac. “At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks‚Äô books, or in foreclosure.”

In other words, the sooner we get that REO absorbed, the sooner we can recover. But this is why many experts predict the market will not rebound or improve until three years from now, or 2014. Mind you, we are talking the vast majority of average Joe Blow homes here, not necessarily Troy’s and even Troy has lost money in real estate.

Meantime, I perused the Dallas foreclosure list and found some humdingers, like this one not too far from George and Laura on Meaders. Looks like the 5000 plus square foot home with five bedrooms, five and a half baths was last listed with dynamo Paulette Green at $1, 299,900. Says taken down to studs and re-built with hand-scraped hardwoods, granite kitchen, all the gourmet bells and whistles… oh oh I spy a master upstairs, but secondary bedroom down!¬† Great large leafy lot but no pool. All bedrooms have baths, nice. DCAD says it’s a remodel of a home built in 1948 on a 100 by 158 foot lot, appraised at $752,730. Methinks this was a bit of a hot mess but can be picked up for a song, now.